The Future of Procurement is Data-driven
Data has become an issue for most Procurement leaders and yet they dream about an emerging future in which analytics, Artificial Intelligence (AI), bots, and other breakthrough technologies will transform everything. However, they underestimate the impact of data on Procurement long-term development and the complexity of these new technologies.
Nowadays, Procurement organizations generate or have potential access to a tremendous number of data, which is often spread across different systems or simply ignored. The questions are: How can procurement professionals’ control and gather in one place all this data? How can they prepare for new technologies that are data-driven?
The Data transformation
The industry has changed (at least, I hope), from Procurement organizations gathering mainly internal, structured data from transactions, operations and suppliers through long processes that often took many days to complete to a much more diverse set of both internal and external, structured and unstructured data obtained from automated processes.
“Data is the currency of the future”
Actually, I noticed that many Procurement organizations still don’t have a decision-making tool that can compare both internal and external data, despite the ever-growing of open data policies and APIs. For instance, many Procurement organizations only gather transaction information based on a transaction but lack the data related to the market… Basically, they’re missing the contextual information surrounding purchasing decisions. Moreover, data is often in silos. Indeed, I noticed that when Procurement data is combined with data sources such as operations, finance and even human resources, new insights can be generated.
I also noticed that some Procurement organizations can lack data (yes, it exists). A lack of data can destroy a company’s efforts to produce the reach an optimal business outcome and prevent the organization from adopting cutting-edge technologies (no data = no AI).
It could be tempting to simply go out and start collecting more and more data. But more data won’t by itself necessarily result in better Procurement performance. When it comes to AI, it’s not only about the size of the data set but also the scope… An organization must find out about:
This data issue is actually key to start building the Procurement future we all envision (better analytics, recommendations and less repetitive tasks). With a robust data foundation, AI can learn the specificities of Procurement and of your organization and, as a result, improve your Procurement department performance.
It is also mandatory to have a data strategy. Organizations must make sure that roles and responsibilities are clearly defined, while the required skill sets and capabilities in order to execute the strategy effectively are also clearly outlined. The idea is to provide your organization with a strategy that highlights the roadmap of the incremental steps the organization needs to take in order to become a fully digital, analytically-driven organization
You must seek to have a complete view of data gathered from multiple information systems and be able to quickly understand it. Data visualization techniques are very helpful in that matter. Through better data and visualization, Procurement professionals can make better decisions and deliver value. As a consequence, the position of Procurement will shift from a cost-saving entity to a business generation function and strategic position.
A new shift
Every procurement task, whether it involves sourcing or contracting is a synonym of rigid manual or perhaps repetitive low-added value tasks. In my opinion, the most advanced organizations will manage to automate these repetitive tasks and focus on data-driven business decisions. It will give them a significant competitive advantage. According to my experience, being highly process driven prevents organizations from developing the kinds of insights it needs to make better decisions.
It is undeniable that the future of Procurement is data-driven and yet processes won’t go away. I rather expect processes to become much more fluid. Procurement professionals could, for example, skip several S2C and P2P tasks if they are given the right data and insights. Augmented decision-making tools will provide valuable information presented in an understandable way that they can quickly act on. The sooner Procurement organizations can start capturing data, compare it with others, understand it with data visualization techniques and discover new ones with AI-powered solutions, the sooner they can put it to work to solve their most pressing problems.
It’s time for procurement to begin taking the steps necessary to become a data-driven organization.
